posted by Maddie on .
Jake's car needs repairs but he is short of cash. A payday loan company charges a fee of 46 for a two week loan of 250. This is equivalent to a discounted loan with proceeds of 250 and a loan amount of 296. What is the per annum interest rate?
296 = 250 [1 + (I/100)/26]
where I is the interest rate in %
296/250 = 1.184 = [1 + (I/100)*(1/26)]
I/2600 = 0.184
I = 478%